Piracy bleeds Mac game makers dry

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As I said in
a previous Game Room weblog entry, Mac gaming is in serious trouble—people aren’t buying games like they used to. Readers who commented on the piece noted that cause and effect aren’t necessarily cut and dried. While some admit that market conditions haven’t made them run out and buy new games as they’re released, others say there just isn’t a lot that appeals to them. But one thing I know unequivocally: Piracy eats into Mac game publisher’s profits, substantially.

You might think that because the Mac game market is so much smaller than the PC game market, piracy isn’t as big a problem. Looking at the lost revenue dollar totals, you might be right, just because the Mac market can’t compare to PC gaming in terms of size. But, nevertheless, piracy has a profound effect on individual Mac game publishers’ profit and loss sheets. In many cases, it’s the difference between being in the black and winding up in the red.

“But I never intended to buy the game, so it’s not really lost revenue,” is a common refrain from people who steal software. That’s bunk—you’re still getting something for nothing. Looking at it another way: If you snuck into Disneyland and ride the Matterhorn for free, security should kick you out, regardless of whether or not you ever intended to pay.

An order of magnitude

Let me try to give you an idea of the effect that piracy has on the Mac game market. I’ve been asked by the game publishers not to go into specifics by naming their games, but I looked at a popular site for downloading Mac games:
Macgamefiles.com. That site tracks cumulative totals of its downloads, and offers game updates as well.

Looking at the game update download tallies for some recent high-profile commercial releases, I compared them to what the publishers confidentially revealed to me were their own sell-through numbers. That is, the number of copies of their games that were actually sold, either directly or through retailers carrying their products.

The difference was nothing short of staggering. It wasn’t at all unusual to see three or four times the number of downloads than retail sales. In one case, it was an order of magnitude—that’s right, to the power of 10—higher than the manufacturer’s sell through.

Now, I can’t say without certainty that every instance of the difference between sell-through and update download is a case of piracy. I’ve had plenty of experiences where I’ve downloaded an update two or three times because I’ve reinstalled a game, or deleted it from one computer and put it on another, and I presume that other gamers have done the same.

But I expect that overall, we’re in the minority. What’s more, not everyone in the Mac game market goes to Macgamefiles.com to download updates—that only represents a portion of the total game playing public. Common sense indicates that a significant portion of that difference
must
be related to piracy.

Industry veterans comment

Freeverse Software
Vice President Colin Lynch Smith told me that his company estimates that up to 50 percent of the copies of its games that are played online are stolen.

Smith noted that Mac game publishers are, by nature, accustomed to much smaller yields than their PC counterparts. But the difference between selling 5,000 copies of a game and selling 2,500 copies and seeing another 2,500 stolen can be the difference between breaking even or making a small profit—or losing money hand over fist.

Destineer
President Peter Tamte tells me that the difference I’ve described between sell-through and update downloads is more common than not. He said that when his company shipped its squad-based first-person shooter
First to Fight
last year, it found within a few weeks that more people were trying to log on to multiplayer servers with a
single
banned serial number than the
total
number of copies Destineer had sold combined.

Aspyr Media
Director of Development Glenda Adams didn’t have much better news. She sees the industry inevitably heading towards more copy protection systems like Steam, a scheme created by
Valve Software, makers of Half-Life 2. Steam requires players to have an online connection to validate their software each time they want to play.

Feral Interactive’s
Edwin Smith said that on any given day, dozens of copies of its games can be found being downloaded from pirate sites that use BitTorrent.

Solutions

When I asked Tamte what game publishers can do to staunch the flow, he gave a telling answer: Shift development to platforms where piracy is less of a problem like game consoles.

And that’s exactly what has happened. PC game publishers have, in recent years, heavily invested in console development partly because it’s a lot harder to pirate games on consoles than it is on PCs (and, by extension, Macs). It’s not impossible—people have been able to “chip” game consoles to run pirated games—but because of the barrier to entry, most people don’t do it.

So what if Apple and Microsoft stepped up to the plate with system-wide Digital Rights Management (DRM) systems that were built into the hardware itself, I asked. What if something like FairPlay—the system Apple uses to restrict the transfer of songs bought from the iTunes Music Store—could be extended to any software application instead of just to media files?

Tamte agreed that it’s a viable idea, but cautioned that it would have to be carefully coordinated. If, for example, Mac OS X added that capability while Windows did not, it might accelerate Mac users’ use of
Boot Camp
to play Windows games on their Macs instead, having exactly the opposite effect as intended.

Freeverse’s Smith said that publishers are caught between a rock and a hard place. On one hand, piracy is lost revenue. On the other hand, he said, publishers can only do so much before they frustrate and alienate paying customers. This is especially true for game software, which is an impulse buy for many users—they’re less likely to acquiesce to restrictive copy protection schemes for a game than they would be with software they depend on to make a living.

“Cracked” versions and pirated serial numbers of new games inevitably follow new releases by hours or days. Heck, sometimes the cracked versions are out before the retail version hits store shelves. That’s not going to change.

By and large, the money that’s being lost here isn’t being lost to major piracy enterprises. It’s what’s known in software publishing as “casual” piracy: These are average end-users like you and me who have created justifications to do what they’re doing—the software’s overpriced; I want to try it before I buy it (but then never get around to buying it); I can’t afford it on a student’s income. And so on.

So in the end, I’m not expecting to convert anyone who is already stealing software to instead follow the straight and narrow path. People will do what they do. But just be aware that whatever the reasoning, piracy is stealing, and it has a profound effect on the Mac game market.

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